No Arbitration for Bank in Overdraft Fee Dispute

(CN) – The U.S. branch of the Royal Bank of Canada cannot force customers to arbitrate claims that they were charged excessive overdraft fees, the 11th Circuit ruled. The federal appeals court in Atlanta found that RBC Bank USA’s latest contract had no arbitration clause and the “parties’ silence provides no evidence that they agreed to be bound to arbitrate their disputes.” The lawsuit, filed by Michael Dasher, is one of several that were consolidated in federal court in the Southern District of Florida. Customers accuse the bank of reordering debit card purchases at the end of each day to draw funds for larger purchases before smaller ones. This allegedly allowed the bank to rake in more $35 overdraft fees on the smaller items. A federal judge in Florida twice denied RBC’s bid to force Dasher to arbitrate his individual claims. The first time, the judge concluded that the arbitration clause in the bank’s 2008 account agreement was unenforceable, as it effectively deterred customers from suing. In 2012, shortly after RBC renewed its motion to compel arbitration, the bank was acquired by PNC Financial Services Group Inc. The new owner issued — and Dasher accepted — a new account agreement containing no such clause. The 11th Circuit on Monday upheld the lower court’s ruling that the new PNC agreement superseded the RBC agreement. “One of the rights PNC acquired from RBC under the RBC agreement was the right to change ‘any part or parts of the agreement’ at any time pursuant to the RBC agreement’s amendment clause,” Judge Charles Wilson wrote for the three-judge panel. “Further, if RBC — or its successor PNC — exercised this right and issued a new agreement, the amendment clause stipulated that ‘the most current version of the agreement supersedes all prior versions and will at all times govern,'” he wrote, adding emphasis. The panel rejected the bank’s claim that even if the old agreement was superseded, its arbitration clause remains binding because the new agreement did not specifically eliminate the clause. “This leads to the implausible conclusion that when parties indicate a clear intent to supersede a prior agreement, that superseding language applies to every term in the prior agreement except for arbitration provisions,” Wilson wrote. RBC’s claim that its original agreement stands because the dispute occurred while the RBC agreement was still effective failed to convince the court. Wilson noted that under the RBC agreement, “the most current version of the agreement supersedes all prior versions and will at all times govern.” “‘At all times’ necessarily includes the past, present, and future, and therefore … the superseding PNC agreement governs this dispute even though the facts giving rise to it occurred in the past,” he concluded.